Dynamic Effects on the Stability of International Environmental Agreements

In terms of the number of signatories, one observes both large and small international environmental agreements. The theoretical literature, based on game theory, discusses different concepts and mechanisms for the stability of coalitions and has reached the conclusion that, under farsightedness, both large and small stable coalitions can occur. In the context of a repeated game, this implies that large stable coalitions can also be sustained over time by a simple trigger mechanism, for large enough discount factors. However, if changes in time implement changes in state, this conclusion does not hold anymore: only small stable coalitions can be sustained.IEA’s, Coalitional stability, Dynamics

Regime Shifts and Uncertainty in Pollution Control

We develop a simple model of managing a system subject to pollution damage under risk of an abrupt and random jump in the damage coefficient. The model allows the full dynamic characterization of the optimal emission policies under uncertainty. The results, that imply prudent behavior due to uncertainty, are compared with the ambiguous outcomes reported in the literature for similar models. The differences are explained in terms of the properties of the damage function associated with each model. The framework is used to analyze the adaptation vs. mitigation dilemma and provides a simple criterion to determine whether adaptation activities should be undertaken promptly, delayed to some future date, or avoided altogether.environmental pollution, optimal management, catastrophic transitions, uncertainty, adaptation, mitigation

Dynamic Effects on the Stability of International Environmental Agreements

In terms of the number of signatories, one observes both large and small international environmental agreements. The theoretical literature, based on game theory, discusses different concepts and mechanisms for the stability of coalitions and has reached the conclusion that, under farsightedness, both large and small stable coalitions can occur. In the context of a repeated game, this implies that large stable coalitions can also be sustained over time by a simple trigger mechanism, for large enough discount factors. However, if changes in time implement changes in state, this conclusion does not hold anymore: only small stable coalitions can be sustained

Regime shifts and uncertainty in pollution control

We develop a simple model of managing a system subject to pollution damage under risk of an abrupt and random jump in the damage coefficient. The model allows the full dynamic characterization of the optimal emission policies under uncertainty. The results, that imply prudent behavior due to uncertainty, are compared with the ambiguous outcomes reported in the literature for similar models. The differences are explained in terms of the properties of the damage function associated with each model. The framework is used to analyze the adaptation vs. mitigation dilemma and provides a simple criterion to determine whether adaptation activities should be undertaken promptly, delayed to some future date, or avoided altogether

On the Optimal Taxation of Common-Pool Resources

Recent research developments in common-pool resource models emphasize the importance of links with ecological systems and the presence of non-linearities, thresholds and multiple steady states. In a recent paper Kossioris et al. (2008) develop a methodology for deriving feedback Nash equilibria for non-linear differential games and apply this methodology to a common-pool resource model of a lake where pollution corresponds to benefits and at the same time affects the ecosystem services. This paper studies the structure of optimal state- dependent taxes that steer the combined economic-ecological system towards the trajectory of optimal management, and provides an algorithm for calculating such taxes.Differential Games, non-linear Feedback Nash Equilibria, Ecosystems, Optimal State-dependent Tax

Can a Focus on Breakthrough Technologies Improve the Performance of International Environmental Agreements?

In a recent paper, Barrett (2006) reaches the conclusion that in general the answer to the question in the title is no. We show in this paper that a focus on the R&D phase in the development of breakthrough technologies changes the picture. The stability of international treaties improves and thus the possibility of realizing benefits of cooperation.

The Effect of Varying the Causes of Environmental Problems on Stated WTP Values: Evidence from a Field Study

Standard applications of utility theory assume that utility depends solely on outcomes and not on causes. This study uses a field experiment conducted in the Netherlands to determine if alternative causes of an environmental problem affect willingness to pay to ameliorate it. We find evidence supporting the hypothesis that people are willing to pay significantly more to correct problems caused by humans than by nature (the ""outrage effect""), but find no support for the hypothesis that ""moral responsibility"" matters. We also find support for the hypothesis that stated willingness to pay values obtained via ""cheap talk"" and ""consequential"" treatments are lower than without inclusion of these protocols.Field experiment, endangered species, non-market valuation

Economic Management and Thresholds in Ecosystems

IIFET 2008 Vietnam keynote presentation. PowerPoint presentation by Professor Aart de Zeeuw from the Department of Economics and Center, Tilburg University and The Beijer Institute of Ecological Economics, Stockholm.Common pool resource models traditionally assume simple resource dynamics but recent research developments emphasize the importance of the link with ecological systems and the presence of thresholds and multiple steady states in these ecosystems. Good examples are lakes, grasslands and coral reef systems. It follows that optimal management of ecosystems and characterization of outcomes under non-cooperative behaviour have to be reconsidered. The basic methodology must be able to handle complex dynamics as well as strategic interaction between users of the resource. This lecture will present some examples of these systems and will focus on the first results in developing methodology with the purpose to characterize and analyze this type of problems. An important remaining issue is that thresholds are usually not known, so that an important topic for further research is how to handle this type of uncertainty

Stabilité stratégique et pollution-stock transnationale : le cas linéaire

Most of the contributions that deal with cooperation issues in transfrontier pollution problems, bear only on pollutants that do not accumulate. Moreover, most articles that deal with the dynamics of the problem (implied by the pollutant's accumulation) leave aside the issue of the voluntary implementation of an international cooperative optimum. The aim of the present contribution is to overtake these two limitations. Using both differential and cooperative game theory, we define at each moment of time a scheme for abatement costs through financial transfers between countries, which makes cooperation better for each of them than non-cooperation (defined as a Nash equilibrium). This sharing scheme is also "strategically stable", in the sense that no coalition is capable to make its members better off than what they would obtain at the optimum with transfers. This results is obtained under the hypothesis that the countries' environmental damage functions are linear, in a framework where countries do reevaluate at each period the advantages to cooperate or not, given the current stock of pollutant.pollution internationale; externalités; jeux différentiels; jeux coopératifs; transferts financiers